The wife and I have been
following a series of exchanges that occurred over the course of the past two weeks about the Singapore
property price data. More specifically, who has the "better" data.

It all started on March 17 with
a column penned by Mr Sam Baker, the co-founder of SRX Property. In his
article, he claimed that a lack of pricing transparency is the reason for the
property market reaching a point where cooling measures currently in place have
cost home owners an estimated $21 billion in lost market value (and counting).

When participants have
insufficient information to make pricing decisions, markets fail - he said.

Mr Baker proceeded to
expound on the virtues of Big Data and how such will make a transparent pricing
possible.

So what exactly is Big Data?
This is where SRX Property's X-Value comes into play. Supposedly developed with government
agencies, academics and valuers, it sources from the nation's most
comprehensive property database and instantaneously calculates a single value
for every home using best practices methodologies, including comparable market
analysis.

As a computer-driven price
mechanism, X-Value factors in all the comparables and adjusts for important
variables like location, size, floor and age.

It also factors in macro
trends from its proprietary price indices, and important on-the-ground
information from thousands of market participants interacting with SRX Property
apps and pricing data on a daily basis.

It is impossible for a
human, even if he had access to all SRX Property's raw property and geospatial
data, to do what a computerised price mechanism does in seconds in terms of
accuracy, data completeness, relevancy and objectivity.

And to reinforce the value
of Big Data, Mr Baker claimed that 93.8% of HDB homes were transacted within
10% of the X-Value. And SRX Property arrived at the figure of a market loss of
$21 billion by using the X-Value to calculate the value of all transacted flats
(recorded) at the market’s price peak and then compared it with their values at
Dec 31 last year.

Similarly, researchers and
analysts can use X-Value to track market movements and estimate gains and
losses. Consumers can also use the tool to check on a valuation price of
properties they are interested in. Government agencies and research institutions
can use X-Value and associated data and analytics to forecast the market and
solve problems before they get too big.

So Mr Baker concluded that with Big Data and technology, productivity,
efficiency and decision-making will improve. And a property market with a
universally accepted and transparent pricing mechanism would make the market
more transparent, keeping it on an even keel that reduces the need for cooling
measures.

With the article’s innuendo of “my property price data is better than
everything that’s out there, including the Government’s”, the wife and I were
pretty certain that the other vested parties would not take this lying down. We
did not have to wait long.

The Council for Estate Agencies (CEA), Housing Development Board (HDB)
and Urban Redevelopment Authority (URA) wrote a combined-response that was
published in the Forum page of The Strait Times yesterday (April 1). In their
response, they refuted some points raised in Mr Baker’s article:

1.Government agencies that deal with housing issues,
such as HDB, URA and CEA did not collaborate with SRX to develop X-Value.

2.There is NO lack of transparency in Singapore’s
housing market - both HDB and URA have been releasing data on the transacted
prices of individual private and public housing units on their respective websites
free of charge for many years to help home buyers make informed decisions. In
fact, SRX has been relying on such open-source property data from government
agencies for its work.

3.It is untrue that the Government is unable to monitor
the prices of properties in different market segments. Government agencies have
up-to-date and comprehensive information on individual sale and rental
transactions of housing units, and use them to monitor property market trends
and formulate policies.

4.The movement in property prices is due to a complex
mix of internal and external economic factors, such as the economic outlook,
interest rates, liquidity, market sentiments, and business and investment
strategies of industry players. It does not hinge on the availability of a market
value for each home alone.

In other words, your (SRX) price data is not any better than ours (HDB/URA) and
definitely not more useful!

And in the latest twist to the tale, Mr Barker wrote a reply to
CEA/HDB/URA today. In his response (again published in the Forum page of The
Straits Times), he acknowledged that raw data is available to the Government
and the public. However, raw data does not equal a transparent pricing
mechanism for the property market.

Mr Baker akin the free transaction data on the HDB and URA websites as
rice – it must be processed and combined with other ingredients to form
something meaningful, like sushi. The problem with raw data is that it must be
processed by users with different levels of expertise, or no expertise at all.
Furthermore, even experts can misinterpret or manipulate raw data.

Big Data, on the other hand, IS sushi. Again referencing to SRX
Property’s X-value, this standardizes market pricing by applying best-practices
methodologies to process raw data from multiple public and private data
sources, and instantaneously computes and disseminates a single value for each
unit. With X-Value, all Singaporeans start from the same page – meaning the
property market joins other markets in having a transparent pricing mechanism.

So in the words of Mr Baker: We don’t have to settle for rice. We can eat sushi!

The wife and I wondered if the latest development will signal an end to the whole debate (probably not). We also
wondered if yesterday’s announcement by URA to revise their Property Price
Index to take into account attributes such as a property’s proximity to MRT,
size and age was (at least in some small ways) prompted by Mr Baker’s original
commentary. But from what has transpired thus far, the wife and I will like to give our two-cents on what we can only deem as a "pissing contest":

1. While any attempt to understand the complexity associated with deriving
the X-Value may be too much for our simple minds, we are quite certain that this
involves some kind of formula/algorithms that require weightages to be assigned
to the variables used. And how/why these weightages are assigned will surely introduce some level of subjectivity to the X-Value.

2. The wife and I do not believe that there is one single set of property price
data/index that is the best or should be used as "the standard" for all references. Based on our experiences, each set of data produced by the various institutions/agencies has their own merits (and deficiencies). Only when
compared together instead of relying on any single set of data/index will enable the
user to make the most informed judgment on how the market is behaving.

3. Property price data/index generally provide more of a macro picture. While these are useful as a gauge on how the property market is moving, nobody (at least not
us anyway) will base their buying decisions solely on the price data/index. And many a
times, sentiments do come into play during property purchase - you may like
that condo unit so much (and it has nothing to do with the unit facing, proximity to MRT etc.) that you are prepared to pay way above what the X-Value
had deemed as "fair value".

And finally, on the subject of rice versus sushi: the wife and I reckon that this
is really a case of "to each
his/her own". While the wife and our little son are huge fans of sushi, I will take my bowl of rice any day! I will probably complement it with
some chicken, small helping of vegetables and probably a fried egg. But I will
not have everything combined into a single rice-ball and then claimed that this
is the one-and-only type of food that anyone will need.

SRX is just trumpeting that they have a better system just like any retailer with a new product would. It is still the consumer's prerogative whether to follow the data, or more specifically the X-value when making the decision to buy a property. Logically speaking, just like when u check valuation for any property from the bank, you don't just rely on one to give u the figure but a basket of valuers/banks to derive a figure for yourself. So it is to the benefit of the property buyer to have many sources such as X-value, URA, squarefoot research, etc to help the buyer conclude the correct figure for himself. He should be his own judge, just my 2 cents worth.

SG Floorplans: Thank you very much for your "2 cents". The wife and I would like to think that we are not just logical but realistic beings as well. So realistically speaking, your might not be able to obtain as many valuations as you would have wanted due to costs and other practical constraints. And if you are looking to take a housing loan, you would probably be stuck with whatever valuation figures that the chosen bank provides.

But we do agree that in a perfect world, you should be getting all available valuations to make comparisons. And even in our not-so-perfect world, we should make the best use of whatever info that we could obtain within our means (and not just the one that claimed to be the best in the market) to make an informed judgement. Cheers!

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Why SG PropTalk?

The wife and I are avid property watchers and self confessed "show-flat fanatics". SG Proptalk is our platform to share our thoughts and experiences on private residential property purchases and investments.

We hope to provide you with our "off-the-cuff" take on new project launches and other property-related stuff, which you may find useful in your search for that ideal home or investment property.